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IFRS Updateof standards and interpretations in issue at 31 August 2014

IFRS Update of standards and interpretations in issue at 31 August 2014 1

Contents

Introduction 2

Section 1: New pronouncements issued as at 31 August 2014 4

Table of mandatory application 4

IFRS 1 Government Loans — Amendments to IFRS 1 6

IFRS 7 Disclosures — Offsetting Financial Assets and Financial Liabilities — Amendments to IFRS 7 6

IFRS 9 Financial Instruments 7

IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements 8

IFRS 10, IFRS 12 and IAS 27 Investment Entities (Amendments) 9

IFRS 11 Joint Arrangements, IAS 28 Investments in Associates and Joint Ventures 9

IFRS 11 Accounting for Acquisitions of Interests in Joint Operations — Amendments to IFRS 11 10

IFRS 12 Disclosure of Interests in Other Entities 11

IFRS 13 Fair Value Measurement 12

IFRS 14 Regulatory Deferral Accounts 12

IFRS 15 Revenue from Contracts with Customers 13

IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation — Amendments to IAS 16 and IAS 38 14

IAS 16 and IAS 41 Agriculture: Bearer Plants — Amendments to IAS 16 and IAS 41 14

IAS 19 Employee Benefits (Revised) 15

IAS 19 Defined Benefit Plans: Employee Contributions — Amendments to IAS 19 15

IAS 27 Equity Method in Separate Financial Statements — Amendments to IAS 27 16

IAS 32 Offsetting Financial Assets and Financial Liabilities — Amendments to IAS 32 16

IAS 36 Recoverable Amount Disclosures for Non-Financial Assets — Amendments to IAS 36 17

IAS 39 Novation of Derivatives and Continuation of Hedge Accounting — Amendments to IAS 39 17

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine 18

IFRIC 21 Levies 18

Improvements to International Financial Reporting Standards 19

Section 2: Items not taken onto the Interpretations Committee’s agenda 22

Section 3: Expected pronouncements from the IASB 28

2 IFRS Update of standards and interpretations in issue at 31 August 2014

Companies reporting under International Financial Reporting

Standards (IFRS) continue to face a steady flow of new standards

and interpretations. The nature of the resulting changes ranges

from significant amendments of fundamental principles to some

minor changes from the annual improvements process (AIP). They

will affect many different areas of accounting ranging from

recognition and measurement to presentation and disclosure.

Some of the changes have implications that go beyond matters of

accounting, potentially also impacting the information systems of

many entities. Furthermore, the changes may impact business

decisions, such as the creation of joint arrangements or the

structuring of particular transactions.

The challenge for preparers is to gain an understanding of what

lies ahead.

Purpose of this publication

This publication provides an overview of the upcoming changes in

standards and interpretations (pronouncements). It does not

provide an in-depth analysis or discussion of the topics. Rather,

the objective is to highlight key aspects of these changes.

Reference should be made to the text of the pronouncements

before taking any decisions or actions.

This publication consists of three sections, which are

summarised below.

Section 1 provides a high-level overview of the key requirements

of each pronouncement issued by the IASB and the IFRS

Interpretations Committee as at 31 August 2014 that is applicable

for the first time for fiscal years ended September 2014 and

thereafter. This overview provides a summary of the transitional

requirements and a brief discussion of the potential impact that

the changes may have on an entity’s financial statements.

1 The IFRIC Update is available on the IASB’s website at

http://www.ifrs.org/Updates/IFRIC+Updates/IFRIC+Updates.htm.

This section is presented in the numerical order of the

pronouncements, except for the AIP. All AIP amendments are

presented at the end of Section 1.

In addition, a table comparing mandatory application for different

year ends is presented at the beginning of Section 1. In the table,

the pronouncements are presented in order of their effective

dates. However, many pronouncements contain provisions that

would allow entities to adopt in earlier periods.

When a standard or interpretation has been issued, but has yet to

be applied by an entity, IAS 8 Accounting Policies, Changes in

Accounting Estimates and Errors requires the entity to disclose

any known (or reasonably estimable) information relevant to

understanding the possible impact that the new pronouncement

will have on the financial statements, or indicate the reason for

not doing so. The table at the beginning of Section 1 is helpful in

identifying the pronouncements that fall within the scope of this

disclosure requirement.

Section 2 provides a summary of the agenda rejection notices

published in the IFRIC Update1 since September 2013 that are

considered to provide relevant guidance on the application of

IFRS. In some rejection notices, the Interpretations Committee

refers to the existing pronouncements that provide guidance.

These rejection notices provide a view on the application of the

pronouncements and fall within ‘other accounting literature and

accepted industry practices’ in paragraph 12 of IAS 8.

Section 3 lists expected pronouncements from the IASB. As

mentioned above, if a standard or interpretation is published prior

to the date on which the financial statements are authorised for

issue, an entity will have to provide the IAS 8 disclosures for

pronouncements that are issued but not yet effective.

Introduction

http://www.ifrs.org/Updates/IFRIC%2BUpdates/IFRIC%2BUpdates.htm


IFRS Core Tools

This publication provides an overview of new pronouncements

issued as at 31 August 2014 that contribute to a significant

amount of accounting change expected in the coming years.

Frequent changes to IFRS add to the complexity entities face when

approaching the financial reporting cycle.

EY’s IFRS Core Tools provide the starting point for assessing the

impact of these changes to IFRS. Our IFRS Core Tools include a

number of practical building blocks that can help the user to

navigate the changing landscape of IFRS. In addition to this

publication, EY’s IFRS Core Tools include the publications

described below.

International GAAP® Disclosure Checklist

Our 2014 International GAAP® Disclosure Checklist captures

disclosure requirements applicable to periods ended 31 December

2014, disclosures that are permitted to be adopted early, and

disclosure requirements for all pronouncements issued as at

31 August 2014. This tool assists preparers to comply with the

presentation and disclosure requirements of IFRS in their interim

and year-end IFRS financial statements.

Good Group (International) Limited

Good Group (International) Limited for the year ended

31 December 2014 is a set of illustrative financial statements,

incorporating presentation and disclosure requirements that are in

issue as at 31 August 2014 and effective for the year ended

31 December 2014. Good Group (International) Limited Interim for

the period ended 30 June 2014 supplements Good Group

(International) Limited. Among other things, these illustrative

financial statements can assist in understanding the impact

accounting changes may have on the financial statements.

Good Group (International) Limited is supplemented by illustrative

financial statements that are aimed at specific sectors, industries

and circumstances. These include:

• Good Bank (International) Limited

• Good Construction (International) Limited

• Good First-time Adopter (International) Limited

• Good Insurance (International) Limited

• Good Investment Fund Limited (Equity)

• Good Investment Fund Limited (Liabilities)

• Good Mining (International) Limited

• Good Petroleum (International) Limited

• Good Real Estate Group (International) Limited

2 International GAAP® is a registered trademark of Ernst & Young LLP (UK).

Also available from EY:

Other EY publications

References to other EY publications that contain further details

and discussion on these topics are included throughout the IFRS

Update, all of which can be downloaded from our website

www.ey.com/ifrs.

International GAAP® 20142

Our International GAAP® 2014 is a comprehensive guide to

interpreting and implementing IFRS. It includes pronouncements

mentioned in this publication that were issued prior to September

2013, and it provides examples that illustrate how the

requirements are applied. International GAAP® 2015 will be

published early in 2015.

http://www.ey.com/ifrs


Table of mandatory application

New pronouncement

IFRS 1 Government Loans — Amendments to IFRS 1 IFRS 7 Disclosures — Offsetting Financial Assets and Financial Liabilities — Amendments to IFRS 7

IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements

IFRS 11 Joint Arrangements, IAS 28 Investments in Associates and Joint Ventures

IFRS 12 Disclosure of Interests in Other Entities

IFRS 13 Fair Value Measurement

IAS 19 Employee Benefits (Revised)

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine

AIP IFRS 1 First-time Adoption of International Financial Reporting Standards — Repeated application of IFRS 1

AIP IFRS 1 First-time Adoption of International Financial Reporting Standards — Borrowing costs

AIP IAS 1 Presentation of Financial Statements — Clarification of the requirements for comparative information

AIP IAS 16 Property, Plant and Equipment — Classification of servicing equipment

AIP IAS 32 Financial Instruments: Presentation — Tax effects of distributions to holders of equity instruments

AIP IAS 34 Interim Financial Reporting — Interim financial reporting and segment information for total assets and liabilities

IFRS 10, IFRS 12 and IAS 27 Investment Entities (Amendments)

IAS 32 Offsetting Financial Assets and Financial Liabilities — Amendments to IAS 32

IAS 36 Recoverable Amount Disclosures for Non-Financial Assets — Amendments to IAS 36

IAS 39 Novation of Derivatives and Continuation of Hedge Accounting — Amendments to IAS 39

IFRIC 21 Levies

IAS 19 Defined Benefit Plans: Employee Contributions — Amendments to IAS 19

AIP IFRS 2 Share-based Payment — Definitions of vesting conditions

AIP IFRS 3 Business Combinations — Accounting for contingent consideration in a business combination

AIP IFRS 8 Operating Segments — Aggregation of operating segments

AIP IFRS 8 Operating Segments — Reconciliation of the total of the reportable segments’ assets to the entity's assets

AIP IFRS 13 Fair Value Measurement — Short-term receivables and payables

AIP IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets — Revaluation method — proportionate restatement of accumulated depreciation/amortisation

AIP IAS 24 Related Party Disclosures — Key management personnel

AIP IFRS 1 First-time Adoption of International Financial Reporting Standards — Meaning of ‘effective IFRSs’

AIP IFRS 3 Business Combinations — Scope exceptions for joint ventures

AIP IFRS 13 Fair Value Measurement — Scope of paragraph 52 (portfolio exception)

AIP IAS 40 Investment Property — Interrelationship between IFRS 3 and IAS 40 (ancillary services)

IFRS 11 Accounting for Acquisitions of Interests in Joint Operations — Amendments to IFRS 11

IFRS 14 Regulatory Deferral Accounts

IAS 16 and IAS 38 — Clarification of Acceptable Methods of Depreciation and Amortisation — Amendments to IAS 16 and IAS 38

IAS 16 and IAS 41 Agriculture — Bearer Plants — Amendments to IAS 16 and IAS 41

IAS 27 — Equity Method in Separate Financial Statements — Amendments to IAS 27

IFRS 15 Revenue from Contracts with Customers

IFRS 9 Financial Instruments

Section 1: New pronouncements issued as at

31 August 2014


Effective Date* Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Page

1 Jan 2013 6

1 Jan 2013 6

1 Jan 2013 8

1 Jan 2013 9

1 Jan 2013 11

1 Jan 2013 12

1 Jan 2013 15

1 Jan 2013 18

1 Jan 2013 19

1 Jan 2013 19

1 Jan 2013 19

1 Jan 2013 19

1 Jan 2013 20

1 Jan 2013 20

1 Jan 2014 9

1 Jan 2014 16

1 Jan 2014 17

1 Jan 2014 17

1 Jan 2014 18

1 Jul 2014 15

1 Jul 2014 20

1 Jul 2014 20

1 Jul 2014 20

1 Jul 2014 20

1 Jul 2014 21

1 Jul 2014 21

1 Jul 2014 21

1 Jul 2014 21

1 Jul 2014 21

1 Jul 2014 21

1 Jul 2014 21

1 Jan 2016 10

1 Jan 2016 12

1 Jan 2016 14

1 Jan 2016 14

1 Jan 2016 16

1 Jan 2017 13

1 Jan 2018 7

AIP Annual IFRS Improvements Process

* Effective for annual periods beginning on or after this date

Pronouncements effective for the previous reporting period

New pronouncements effective for the current reporting period

New pronouncements that will become effective for the next reporting period

New pronouncements that will become effective in periods subsequent to the next reporting period


IFRS 1 Government Loans — Amendments to IFRS 1

Effective for annual periods beginning on or after 1 January 2013.

Key requirements

The IASB added an exception to the retrospective application

of IFRS 9 Financial Instruments (or IAS 39 Financial

Instruments: Recognition and Measurement, as applicable) and

IAS 20 Accounting for Government Grants and Disclosure of

Government Assistance. These amendments require first-time

adopters to apply the requirements of IAS 20 prospectively to

government loans existing at the date of transition to IFRS.

However, entities may choose to apply the requirements of IFRS 9

(or IAS 39, as applicable) and IAS 20 to government loans

retrospectively if the information needed to do so had been

obtained at the time of initially accounting for those loans.

The exception will give first-time adopters relief from retrospective

measurement of government loans with a below-market rate of

interest. As a result of not applying IFRS 9 (or IAS 39, as applicable)

and IAS 20 retrospectively, first-time adopters will not have to

recognise the corresponding benefit of a below-market rate

government loan as a government grant.

Transition

Early application is permitted and must be disclosed.

Impact

These amendments give first-time adopters the same relief that

existing preparers of IFRS financial statements had on the first-time

application of IAS 20 (as revised in May 2008) and, therefore, will

reduce the cost of transition to IFRS.

IFRS 7 Disclosures — Offsetting Financial Assets and Financial Liabilities — Amendments to IFRS 7

Effective for periods beginning on or after 1 January 2013.

Key requirements

The amendments require an entity to disclose information about

rights of set-off and related arrangements (e.g., collateral

agreements). The disclosures will provide users with information

that is useful in evaluating the effect of netting arrangements on

an entity’s financial position. The new disclosures are required

for all recognised financial instruments that are set off in

accordance with IAS 32 Financial Instruments: Presentation. The

disclosures also apply to recognised financial instruments that

are subject to an enforceable master netting arrangement or

‘similar agreement’, irrespective of whether they are set off in

accordance with IAS 32.

Transition

The amendments must be applied retrospectively. Early

application is permitted and must be disclosed. If an entity

chooses to early adopt the amendments, it also must make the

disclosure required by IFRS 7 Disclosures — Offsetting Financial

Assets and Financial Liabilities — Amendments to IFRS 7.

Impact

To extract the necessary data to prepare the new

disclosures, entities (in particular, banks) may need to modify

management information systems and internal controls,

including linking their credit systems to accounting systems.


Applying IFRS: Offsetting financial instruments: clarifying the amendments (May 2012) EYG no. AU1182.

IFRS Developments Issue 22: Offsetting of financial instruments

(December 2011) EYG no. AU1053.


IFRS 9 Financial Instruments


Key requirements

Classification and measurement of financial assets

• All financial assets are measured at fair value on initial

recognition, adjusted for transaction costs if the instrument is not

accounted for at fair value through profit or loss (FVTPL).

However, trade receivables without a significant financing

component are initially measured at their transaction price as

defined in IFRS 15 Revenue from Contracts with Customers.

• Debt instruments are subsequently measured on the basis of their

contractual cash flows and the business model under which the debt

instruments are held. If a debt instrument has contractual cash flows

that are solely payments of principal and interest on the principal

outstanding and is held within a business model with the objective

of holding the assets to collect contractual cash flows, it is

accounted for at amortised cost. If a debt instrument has contractual

cash flows that are solely payments of principle and interest on the

principal outstanding and is held in a business model whose

objective is achieved by both collecting contractual cash flows

and selling financial assets, it is measured at fair value through

other comprehensive income (FVOCI) with subsequent

reclassification to profit or loss.

• All other debt instruments are subsequently accounted for at

FVTPL. Also, there is a fair value option (FVO) that allows

financial assets on initial recognition to be designated as FVTPL if

that eliminates or significantly reduces an accounting mismatch.

• Equity instruments are generally measured at FVTPL. However,

entities have an irrevocable option on an instrument-by-

instrument basis to present changes in the fair value of non-

trading instruments in OCI (without subsequent reclassification

to profit or loss).

Classification and measurement of financial liabilities

• For financial liabilities designated as FVTPL using the FVO, the

amount of change in the fair value of such financial liabilities

that is attributable to changes in credit risk must be presented in

OCI. The remainder of the change in fair value is presented in

profit or loss, unless presentation of the fair value change in

respect of the liability’s credit risk in OCI would create or enlarge

an accounting mismatch in profit or loss.

• All other IAS 39 classification and measurement requirements for

financial liabilities have been carried forward into IFRS 9, including

the embedded derivative separation rules and the criteria for

using the FVO.

Impairment

• The impairment requirements are based on an expected credit

loss (ECL) model that replaces the IAS 39 incurred loss model.

• The ECL model applies to: debt instruments accounted for at

amortised cost or at FVOCI; most loan commitments; financial

guarantee contracts; contract assets under IFRS 15; and lease

receivables under IAS 17 Leases.

• Entities are generally required to recognise either 12-months’ or

lifetime ECL, depending on whether there has been a significant

increase in credit risk since initial recognition (or when the

commitment or guarantee was entered into). For trade

receivables without a significant financing component, and

depending on an entity’s accounting policy choice for other trade

receivables and lease receivables, a simplified approach applies

whereby lifetime ECL are always recognised.

• The measurement of ECL must reflect a probability-weighted

outcome, the effect of the time value of money, and based on

reasonable and supportable information that is available without

undue cost or effort.

Hedge accounting

• Hedge effectiveness testing must be prospective and can be

qualitative, depending on the complexity of the hedge.

• A risk component of a financial or non-financial instrument may

be designated as the hedged item if the risk component is

separately identifiable and reliably measureable.

• The time value of an option, the forward element of a forward

contract and any foreign currency basis spread can be excluded

from the designation as the hedging instrument and accounted

for as costs of hedging.

• More designations of groups of items as the hedged item are

possible, including layer designations and some net positions.

Transition

An entity may elect to apply earlier versions of IFRS 9 if, and only

if, the entity’s relevant date of initial application is before

1 February 2015. Otherwise, early application is only permitted if

the complete version of IFRS 9 is adopted in its entirety for

reporting periods beginning after 24 July 2014.The transition to

IFRS 9 differs by requirements and is partly retrospective and

partly prospective. Despite the requirement to apply IFRS 9 in its

entirety, entities may elect to early apply only the requirements

for the presentation of gains and losses on financial liabilities

designated as at FVTPL without applying the other requirements

in the standard. An entity that elects to do so is required to

disclose that fact and provide the related disclosures set out in

paragraphs 10-11 of IFRS 7 Financial Instruments: Disclosures.

Impact

The application of IFRS 9 will likely result in significant changes to an

entity’s current accounting, systems and processes. For entities

considering early application, there are a number of benefits and

challenges that should be considered. Careful planning for this

transition will be necessary.


IFRS Developments Issue 87: IASB issues IFRS 9 Financial

Instruments – expected credit losses (July 2014) EYG no. AU2537

IFRS Developments Issue 86: IASB issues IFRS 9 Financial

Instruments – classification and measurement (July 2014)

EYG no. AU2536

Applying IFRS – Hedge accounting under IFRS 9 (February 2014)

EYG no. AU2185.


IFRS 10 Consolidated Financial Statements,

IAS 27 Separate Financial Statements


Key requirements

IFRS 10 replaces the portion of IAS 27 that addresses the

accounting for consolidated financial statements. It also addresses

the issues raised in SIC-12 Consolidation — Special Purpose Entities,

which resulted in SIC-12 being withdrawn. IAS 27, as revised, is

limited to the accounting for investments in subsidiaries, joint

ventures, and associates in separate financial statements.

IFRS 10 does not change consolidation procedures (i.e., how to

consolidate an entity). Rather, IFRS 10 changes whether an entity is

consolidated by revising the definition of control. Control exists when

an investor has:

• Power over the investee (defined in IFRS 10 as when the

investor has existing rights that give it the current ability to

direct the relevant activities)

• Exposure, or rights, to variable returns from its involvement

with the investee

• The ability to use its power over the investee to affect the

amount of the investor’s returns

IFRS 10 also provides a number of clarifications on applying this

new definition of control, including the following key points:

• An investor is any party that potentially controls an investee;

such party need not hold an equity investment to be considered

an investor

• An investor may have control over an investee even when it has

less than a majority of the voting rights of that investee

(sometimes referred to as de facto control)

• Exposure to risks and rewards is an indicator of control, but

does not in itself constitute control

• When decision-making rights have been delegated or are being

held for the benefit of others, it is necessary to assess whether a

decision-maker is a principal or an agent to determine whether it

has control

• Consolidation is required until such time as control ceases,

even if control is temporary

Transition

IFRS 10 must be applied using a modified retrospective approach.

The entity will need to make an assessment of whether control

exists at the date of initial application (i.e., the beginning of the

annual reporting period in which IFRS 10 is applied for the first

time). If the control assessment is the same between IFRS 10 and

IAS 27/SIC-12, no retrospective application is required. However,

if the control assessment under the two standards is different,

retrospective adjustments have to be made. If more than one

comparative period is presented, additional relief is given to

require only one period to be restated.

Earlier application is permitted if the entity also applies the

requirements of IFRS 11 Joint Arrangements, IFRS 12 Disclosure of

Interests in Other Entities, IAS 27 (as revised in 2011) and IAS 28

Investments in Associates (as revised in 2011) at the same time.

Impact

IFRS 10 creates a new, and broader, definition of control. This may

result in changes to a consolidated group (i.e., more or fewer

entities being consolidated).

Assessing control requires a comprehensive understanding of an

investee’s purpose and design, and the investor’s rights and

exposures to variable returns, as well as rights and returns held by

other investors. This may require input from sources outside of the

accounting function, such as operational personnel and legal

counsel, and information external to the entity. It will also require

significant judgement of the facts and circumstances.


Applying IFRS: Challenges in adopting and applying IFRS 10


IFRS Developments Issue 35: Transition guidance amendments for

IFRS 10, IFRS 11 and IFRS 12 (July 2012) EYG no. AU1235.

IFRS Practical Matters: What do the new consolidation, joint

arrangements and disclosures accounting standards mean to you?

(June 2011) EYG no. AU0853.

IFRS Developments Issue 1: IASB issues three new standards:

Consolidated Financial Statements, Joint Arrangements,

and Disclosure of Interests in Other Entities (May 2011)

EYG no. AU0839.


IFRS 10, IFRS 12 and IAS 27 Investment Entities

(Amendments)


Key requirements

The investment entities amendments provide an exception to the

consolidation requirement for entities that meet the definition of an

investment entity.

The key amendments include:

• ‘Investment entity’ is defined in IFRS 10

• An entity must meet all three elements of the definition and

consider whether it has four typical characteristics, in order to

qualify as an investment entity

• An entity must consider all facts and circumstances, including

its purpose and design, in making its assessment

• An investment entity accounts for its investments in

subsidiaries at fair value through profit or loss in accordance

with IFRS 9 (or IAS 39, as applicable), except for investments

in subsidiaries that provide services that relate to the

investment entity’s investment activities, which must

be consolidated

• An investment entity must measure its investment in another

controlled investment entity at fair value

• A non-investment entity parent of an investment entity

is not permitted to retain the fair value accounting

that the investment entity subsidiary applies to its

controlled investees

• For venture capital organisations, mutual funds, unit trusts and

others that do not qualify as investment entities, the existing

option in IAS 28, to measure investments in associates and

joint ventures at fair value through profit or loss, is retained

Transition

The amendments must be applied retrospectively, subject to

certain transition reliefs.


Impact

The concept of an investment entity is new in IFRS. The

amendments represent a significant change for investment

entities, which are currently required to consolidate investees

that they control. Significant judgement of facts and

circumstances may be required to assess whether an entity

meets the definition of investment entity.


IFRS Developments Issue 44: Investment entities final

amendment – exception to consolidation (October 2012)

EYG no. AU1330.

IFRS 11 Joint Arrangements, IAS 28 Investments in

Associates and Joint Ventures


Key requirements

IFRS 11 replaces IAS 31 Interests in Joint Ventures and

SIC-13 Jointly-controlled Entities — Non-monetary Contributions

by Venturers. Joint control under IFRS 11 is defined as the

contractually agreed sharing of control of an arrangement,

which exists only when the decisions about the relevant

activities require the unanimous consent of the parties sharing

control. ‘Control’ in ‘joint control’ refers to the definition of

‘control’ in IFRS 10.

IFRS 11 also changes the accounting for joint arrangements by

moving from three categories under IAS 31 to the following

two categories:

Joint operation — An arrangement in which the parties with joint

control have rights to the assets and obligations for the liabilities

relating to that arrangement. In respect of its interest in a joint

operation, a joint operator must recognise all of its assets,

liabilities, revenues and expenses, including its relative share of

jointly controlled assets, liabilities, revenue and expenses.

Joint venture — An arrangement in which the parties with joint

control have rights to the net assets of the arrangement. Joint

ventures are accounted for using the equity method. The option

in IAS 31 to account for joint ventures as defined in IFRS 11

using proportionate consolidation has been removed.

Under these new categories, the legal form of the joint

arrangement is not the only factor considered when classifying

the joint arrangement as either a joint operation or a joint

venture, which is a change from IAS 31. Under IFRS 11, parties

are required to consider whether a separate vehicle exists and, if

so, the legal form of the separate vehicle, the contractual terms

and conditions, and other facts and circumstances.

IAS 28 has been amended to include the application of the equity

method to investments in joint ventures.

Transition

IFRS 11 must be applied using a modified retrospective approach.

Similar to IFRS 10, relief is given to require only one period to be

restated, if more than one comparative period is presented.

Early application of IFRS 11 is permitted, provided that an

entity also applies the requirements of IFRS 10, IFRS 12, IAS 27

(as revised in 2011) and IAS 28 (as revised in 2011) at the

same time.


Impact

IFRS 11 represents a significant change for entities accounting for

interests in jointly controlled entities using proportionate

consolidation, if such arrangements are classified as joint ventures

under IFRS 11. It is also possible that arrangements that were

considered to be jointly controlled entities will be considered joint

operations under IFRS 11, which will affect the accounting for such

entities, regardless of whether they have been accounted for using

the equity method or proportionate consolidation.

Since ‘control’ in ‘joint control’ refers to the new definition of

‘control’ in IFRS 10, it is possible that what is considered a joint

arrangement under IFRS 11 will change. Significant judgement

of the facts and circumstances may be required to assess

whether joint control exists and to determine the classification

of the arrangement.




IFRS Developments Issue 35: Transition guidance amendments

for IFRS 10, IFRS 11 and IFRS 12 (July 2012) EYG no. AU1235.





Consolidated Financial Statements, Joint Arrangements, and

Disclosure of Interests in Other Entities (May 2011)

EYG no. AU0839.

IFRS 11 Accounting for Acquisitions of Interests in

Joint Operations – Amendments to IFRS 11


Key requirements

The amendments require an entity acquiring an interest in a

joint operation in which the activity of the joint operation

constitutes a business to apply, to the extent of its share, all of the

principles on business combination accounting in IFRS 3 Business

Combinations, and other IFRSs, that do not conflict with the

requirements of IFRS 11. Furthermore, entities are required to

disclose the information required in those IFRSs in relation to

business combinations.

The amendments also apply to an entity on the formation of a joint

operation if, and only if, an existing business is contributed by the

entity to the joint operation on its formation.

The amendments also clarify that for the acquisition of an

additional interest in a joint operation in which the activity of the

joint operation constitutes a business, previously held interests in

the joint operation must not be remeasured if the joint operator

retains joint control.

Transition

The amendments are applied prospectively. Early application is

permitted and must be disclosed.

Impact

The amendments effectively eliminate diversity in practice

and give preparers a consistent set of principles to apply for

such transactions.





IFRS 12 Disclosure of Interests in Other Entities


Key requirements

IFRS 12 applies to an entity that has an interest in subsidiaries,

joint arrangements, associates and/or structured entities. Many of

the disclosure requirements of IFRS 12 were previously included in

IAS 27, IAS 31, and IAS 28, while others are new.

The objective of the IFRS 12 disclosure requirements is to help the

users of financial statements understand the following:

• The effects of an entity’s interests in other entities on its

financial position, financial performance and cash flows

• The nature of, and the risks associated with, the entity’s interest

in other entities

Some of the more extensive qualitative and quantitative disclosures

of IFRS 12 include:

• Summarised financial information for each subsidiary that has

non-controlling interests that are material to the reporting entity

• Significant judgements used by management in determining

control, joint control and significant influence, and the type

of joint arrangement (i.e., joint operation or joint venture),

if applicable

• Summarised financial information for each individually material

joint venture and associate

• Nature of the risks associated with an entity’s interests in

unconsolidated structured entities, and changes to those risks

Transition

IFRS 12 must be applied retrospectively, with some relief being

provided:

• Disclosure requirements of IFRS 12 need to be applied only for

the current period and one comparative period, if more than

one is presented

• Comparatives for disclosures relating to unconsolidated

structured entities are not required

An entity may early adopt IFRS 12 before adopting IFRS 10,

IFRS 11, IAS 27 and IAS 28. Entities are encouraged to provide

some of the information voluntarily, even if they are not adopting

all of IFRS 12 before its effective date.

Impact

The new disclosures will assist users to make their own assessment

of the financial impact of management’s conclusion regarding

consolidation. Additional procedures and changes to systems may

be required to gather information for the preparation of the

additional disclosures.


Applying IFRS: IFRS 12 – Structured entities for fund managers

(February 2014) EYG no. AU2099.

Applying IFRS: IFRS 12 – Example disclosures for interests in

unconsolidated structured entities (March 2013) EYG no. AU1407.

IFRS Developments Issue 35: Transition guidance amendments for

IFRS 10, IFRS 11 and IFRS 12 (July 2012) EYG no. AU1235.





Consolidated Financial Statements, Joint Arrangements,

and Disclosure of Interests in Other Entities (May 2011)

EYG no. AU0839.


IFRS 13 Fair Value Measurement


Key requirements

IFRS 13 does not change when fair value is used, but rather

describes how to measure fair value when fair value is required or

permitted by IFRS.

Fair value under IFRS 13 is defined as “the price that would be

received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date”

(i.e., an exit price). Fair value as used in IFRS 2 Share-based

Payment and IAS 17 is excluded from the scope of IFRS 13.

The standard provides clarification on a number of areas, including

the following:

• Concepts of ‘highest and best use’ and ‘valuation premise’ are

relevant only for non-financial assets

• Adjustments for blockage factors (block discounts) are

prohibited in all fair value measurements

• A description of how to measure fair value when a market

becomes less active

New disclosures related to fair value measurements are also

required to help users understand the valuation techniques and

inputs used to develop fair value measurements and the effect of

fair value measurements on profit or loss.

Transition

IFRS 13 is applied prospectively. Early application is permitted and

must be disclosed.

Impact

Fair value measurements recognised in the financial statements

may change upon implementation of IFRS 13. The extent of this

change will vary depending on the type of asset or liability being

measured and the previous fair value measurement requirements

to which they were subject. Similarly, the effect of IFRS 13 may

vary by industry. At a minimum, the adoption of IFRS 13 will

require entities to reconsider their processes and procedures for

measuring fair value and providing the required disclosures.


Applying IFRS: IFRS 13 Fair Value Measurement (November 2012)

EYG no. AU1362.

IFRS Developments Issue 2: Fair value measurement guidance

converges (May 2011) EYG no. AU0840.

IFRS 14 Regulatory Deferral Accounts


Key requirements

IFRS 14 allows an entity, whose activities are subject to rate-

regulation, to continue applying most of its existing accounting

policies for regulatory deferral account balances upon its first-time

adoption of IFRS. Existing IFRS preparers are prohibited from

applying the standard. Also, an entity whose current GAAP does

not allow the recognition of rate-regulated assets and liabilities, or

that has not adopted such policy under its current GAAP, would not

be allowed to recognise them on first-time application of IFRS.

Entities that adopt IFRS 14 must present the regulatory deferral

accounts as separate line items on the statement of financial

position and present movements in these account balances as

separate line items in the statement of profit or loss and other

comprehensive income.

The standard requires disclosures on the nature of, and risks

associated with, the entity’s rate regulation and the effects of that

rate regulation on its financial statements.

Transition

IFRS 14 is applied retrospectively. Early application is permitted

and must be disclosed.

Impact

IFRS 14 provides first-time adopters of IFRS with relief from

derecognising rate-regulated assets and liabilities until a

comprehensive project on accounting for such assets and liabilities

is completed by the IASB. The comprehensive rate-regulated

activities project is on the IASB’s active agenda.


IFRS Developments Issue 72: The IASB issues IFRS 14 – interim

standard on regulatory deferral accounts (February 2014)

EYG no. AU2146.


IFRS 15 Revenue from Contracts with Customers


Key requirements

IFRS 15 replaces all existing revenue requirements

(IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer

Loyalty Programmes, IFRIC 15 Agreements for the Construction of

Real Estate, IFRIC 18 Transfers of Assets from Customers and SIC 31

Revenue – Barter Transactions Involving Advertising Services) in IFRS

and applies to all revenue arising from contracts with customers. It

also provides a model for the recognition and measurement of sales

of some non-financial assets including disposals of property,

equipment and intangible assets.

The standard outlines the principles an entity must apply to measure

and recognise revenue. The core principle is that an entity will

recognise revenue at an amount that reflects the consideration to

which the entity expects to be entitled in exchange for transferring

goods or services to a customer.

The principles in IFRS 15 will be applied using a five-step model:

1. Identify the contract(s) with a customer

2. Identify the performance obligations in the contract

3. Determine the transaction price

4. Allocate the transaction price to the performance obligations in

the contract

5. Recognise revenue when (or as) the entity satisfies a

performance obligation

For each step of the model, the standard requires entities to exercise

judgement and to consider all relevant facts and circumstances when

applying the model to contracts with their customers.

In addition to the five-step model, the standard also specifies how to

account for the incremental costs of obtaining a contract and the

costs directly related to fulfilling a contract.

Application guidance is provided in the standard to assist entities

in applying its requirements to common arrangements, including

licences, warranties, rights of return, principal-versus-agent

considerations, options for additional goods or services,

and breakage.

Transition

Entities are allowed to choose either a full retrospective approach for

all periods presented in the period of adoption with some limited relief

provided, or a modified retrospective approach. Early application is


Impact

IFRS 15 is more prescriptive than current IFRS and provides more

application guidance. The disclosure requirements are also more

extensive. The standard will likely affect entities across all industries

and the adoption of the new requirements will be a significant

undertaking for most entities with potential changes to an entity’s

current accounting, systems and processes. Therefore it is

important for entities to start assessing the impact early.


Applying IFRS: A closer look at the new revenue recognition

standard (June 2014) EYG no. AU2516.

IFRS Developments Issue 85: Joint Transition Resource Group for

Revenue Recognition debates implementation issues (July 2014)

EYG no. AU2535.

IFRS Developments Issue 80: IASB and FASB issue new revenue

recognition standard — IFRS 15 (May 2014) EYG no. AU2427.


IAS 16 and IAS 38 Clarification of Acceptable Methods

of Depreciation and Amortisation – Amendments to

IAS 16 and IAS 38


Key requirements

The amendments clarify the principle in IAS 16 Property, Plant and

Equipment and IAS 38 Intangible Assets that revenue reflects a

pattern of economic benefits that are generated from operating a

business (of which the asset is part) rather than the economic

benefits that are consumed through use of the asset. As a result,

the ratio of revenue generated to total revenue expected to be

generated cannot be used to depreciate property, plant and

equipment and may only be used in very limited circumstances to

amortise intangible assets.

Transition

The amendments are effective prospectively. Early application is


Impact

Entities currently using revenue-based amortisation methods for

property, plant and equipment will need to change their current

amortisation approach to an acceptable method that results in a

different amortisation pattern.


IFRS Developments Issue 78: IASB prohibits revenue-based

depreciation (May 2014) EYG no. AU2353.

IAS 16 and IAS 41 Agriculture: Bearer Plants –

Amendments to IAS 16 and IAS 41


Key requirements

The amendments to IAS 16 and IAS 41 Agriculture change the scope

of IAS 16 to include biological assets that meet the definition of

bearer plants (e.g., fruit trees). Agricultural produce growing on

bearer plants (e.g., fruit growing on a tree) will remain within the

scope of IAS 41. As a result of the amendments, bearer plants will

be subject to all the recognition and measurement requirements in

IAS 16 including the choice between the cost model and

revaluation model.

In addition, government grants relating to bearer plants will be

accounted for in accordance with IAS 20, instead of IAS 41.

Transition

Entities may apply the amendments on a fully retrospective basis.

Alternatively, an entity may choose to measure a bearer plant at its

fair value at the beginning of the earliest period presented. Any

difference between the fair value used as deemed cost at that date

and the previous carrying amount will be recognised in retained

earnings. Earlier application is permitted and must be disclosed.

Impact

The amendments effectively provide entities with a choice of

using either the cost model or continuing to measure their bearer

plants at fair value under the revaluation model. However, the

requirements will not entirely alleviate the need to measure fair

value or eliminate the volatility in profit or loss as agricultural

produce will still be measured at fair value.

In addition, entities using the revaluation model for bearer plants

will recognise fair value changes in other comprehensive income,

rather than profit or loss.

Moreover, unlike biological assets, property, plant and equipment is

not scoped out of IAS 36 Impairment of Assets. Entities will,

therefore, need to assess whether there are indicators that a bearer

plant is impaired at the end of each reporting period. If such

indicators exist, an impairment loss will be recognised if the carrying

value is lower than the bearer asset’s recoverable amount.


IFRS Developments Issue 84: Bearer plants – the new

requirements (July 2014) EYG no. AU2518.


IAS 19 Employee Benefits (Revised)


Key requirements

The revised standard includes a number of amendments that range

from fundamental changes to simple clarifications and re-wording.

The more significant changes include the following:

• For defined benefit plans, the ability to defer recognition of

actuarial gains and losses (i.e., the corridor approach) has been

removed. As revised, amounts recorded in profit or loss are

limited to current and past service costs, gains or losses on

settlements, and net interest income (expense). All other changes

in the net defined benefit asset (liability), including actuarial gains

and losses, are recognised in OCI with no subsequent recycling to

profit or loss.

• Expected returns on plan assets will no longer be recognised in

profit or loss. Expected returns are replaced by recording interest

income in profit or loss, which is calculated using the discount

rate used to measure the pension obligation.

• Objectives for disclosures of defined benefit plans are explicitly

stated in the revised standard, along with new and revised

disclosure requirements. These new disclosures include

quantitative information about the sensitivity of the defined

benefit obligation to a reasonably possible change in each

significant actuarial assumption.

• Termination benefits are recognised at the earlier of when the

offer of termination cannot be withdrawn, or when the related

restructuring costs are recognised under IAS 37 Provisions,

Contingent Liabilities and Contingent Assets.

• The distinction between short-term and other long-term

employee benefits is based on the expected timing of

settlement rather than the employee’s entitlement to

the benefits.

Transition

The revised standard must be applied retrospectively. There are

limited exceptions for restating assets outside the scope of

IAS 19 and for presenting sensitivity disclosures for comparative

periods in the period the amendments are first effective. Early

application is permitted and must be disclosed.

Impact

These changes represent a significant further step in reporting

gains and losses outside of profit or loss, with no subsequent

recycling. Actuarial gains and losses will be excluded permanently

from profit or loss. In addition, the removal of the corridor

approach will be a significant change for some entities.


Applying IFRS: Implementing the 2011 revisions to employee

benefits (November 2011) EYG no. AU1007.

IFRS Developments Issue 6: Significant changes to accounting for

pensions (June 2011) EYG no. AU0888.

IAS 19 Defined Benefit Plans: Employee Contributions

— Amendments to IAS 19

Effective for annual periods beginning on or after 1 July 2014.

Key requirements

IAS 19 requires an entity to consider contributions from employees

or third parties when accounting for defined benefit plans. IAS 19

requires such contributions that are linked to service to be attributed

to periods of service as a negative benefit.

The amendments clarify that, if the amount of the contributions is

independent of the number of years of service, an entity is permitted

to recognise such contributions as a reduction in the service cost in

the period in which the service is rendered, instead of allocating the

contributions to the periods of service. Examples of such

contributions include those that are a fixed percentage of the

employee’s salary, a fixed amount of contributions throughout the

service period, or contributions that depend on the employee’s age.

Transition

The amendments must be applied retrospectively. Early application

is permitted and must be disclosed.

Impact

These changes provide a practical expedient for simplifying the

accounting for contributions from employees or third parties in

certain situations.


IAS 27 Equity Method in Separate Financial

Statements – Amendments to IAS 27


Key requirements

When IAS 27 and IAS 28 were revised in 2003, the equity

method was removed as an option to account for investments in

subsidiaries and associates in an entity’s separate financial

statements. In some jurisdictions, local regulations require an

entity to use the equity method for this purpose, therefore

creating a difference between separate financial statements

prepared in accordance with local GAAP and those prepared in

accordance with IFRS. The objective of these amendments is to

restore the option to use the equity method. Therefore, an entity

must account for these investments either:

• At cost

• In accordance with IFRS 9 (or IAS 39)

Or

• Using the equity method

The entity must apply the same accounting for each category

of investments.

A consequential amendment was also made to IFRS 1 First-time

Adoption of International Financial Reporting Standards. The

amendment to IFRS 1 allows a first-time adopter accounting for

investments in the separate financial statements using the equity

method, to apply the IFRS 1 exemption for past business

combinations to the acquisition of the investment.

Transition

The amendments must be applied retrospectively. Early


Impact

The amendments eliminate a GAAP difference for countries

where regulations require entities to use the equity method to

account for investments in subsidiaries, associates and joint

ventures in an entity’s separate financial statements.

IAS 32 Offsetting Financial Assets and Financial

Liabilities — Amendments to IAS 32


Key requirements

The amendments to IAS 32 clarify the meaning of “currently has a

legally enforceable right to set-off”. The amendments also clarify

the application of the IAS 32 offsetting criteria to settlement

systems (such as central clearing house systems), which apply gross

settlement mechanisms that are not simultaneous.

The amendments clarify that rights of set-off must not only be

legally enforceable in the normal course of business, but must also

be enforceable in the event of default and the event of bankruptcy

or insolvency of all of the counterparties to the contract, including

the reporting entity itself. The amendments also clarify that rights

of set-off must not be contingent on a future event.

The IAS 32 offsetting criteria require the reporting entity to intend

either to settle on a net basis, or to realise the asset and settle the

liability simultaneously. The amendments clarify that only gross

settlement mechanisms with features that eliminate or result in

insignificant credit and liquidity risk and that process receivables

and payables in a single settlement process or cycle would be, in

effect, equivalent to net settlement and, therefore, meet the net

settlement criterion.

Transition

The amendments must be applied retrospectively. Early application

is permitted. If an entity chooses to early adopt, it must disclose

that fact and also make the disclosure required by IFRS 7

Disclosures — Offsetting Financial Assets and Financial liabilities —

Amendments to IFRS 7.

Impact

Entities will need to review legal documentation and settlement

procedures, including those applied by the central clearing houses

they deal with to ensure that offsetting of financial instruments is

still possible under the new criteria. Changes in offsetting may have

a significant impact on financial statement presentation. The effect

on leverage ratios, regulatory capital requirements, etc., will need

to be considered.


Applying IFRS: Offsetting financial instruments: clarifying the

amendments (May 2012) EYG no. AU1182.

IFRS Developments Issue 22: Offsetting of financial instruments



IAS 36 Recoverable Amount Disclosures for Non-

Financial Assets — Amendments to IAS 36


Key requirements

The amendments clarify the disclosure requirements in respect of

fair value less costs of disposal. When IAS 36 was originally changed

as a consequence of IFRS 13, the IASB intended to require disclosure

of information about the recoverable amount of impaired assets if

that amount was based on fair value less costs to sell. However, as

written, an entity was required to disclose the recoverable amount

for each cash-generating unit for which the carrying amount of

goodwill or intangible assets with indefinite useful lives allocated to

that unit was significant in comparison with the entity’s total carrying

amount of goodwill or intangible assets with indefinite useful lives.

This requirement has been deleted by the amendments.

In addition, the IASB added two disclosure requirements:

• Additional information about the fair value measurement of

impaired assets when the recoverable amount is based on fair

value less costs of disposal

• Information about the discount rates that have been used when

the recoverable amount is based on fair value less costs of

disposal using a present value technique. The amendments

harmonise disclosure requirements between value in use and fair

value less costs of disposal

Transition

The amendments must be applied retrospectively. Early application is

permitted when the entity also applies IFRS 13 and must be disclosed.

Impact

As a result of the amendments, entities are no longer required to

disclose information that was regarded as commercially sensitive by

preparers. This might be a valid reason for entities to early adopt the

amendments. Nevertheless, additional information needs to be

provided. In general, it is likely that the information required to be

disclosed will be readily available.

IAS 39 Novation of Derivatives and Continuation of

Hedge Accounting — Amendments to IAS 39


Key requirements

The amendments provide an exception to the requirement to

discontinue hedge accounting in certain circumstances in which

there is a change in counterparty to a hedging instrument in

order to achieve clearing for that instrument. The amendments

cover novations:

• That arise as a consequence of laws or regulations, or the

introduction of laws or regulations

• In which the parties to the hedging instrument agree that one or

more clearing counterparties replace the original counterparty to

become the new counterparty to each of the parties

• That did not result in changes to the terms of the original

derivative other than changes directly attributable to the change

in counterparty to achieve clearing

All of the above criteria must be met to continue hedge accounting

under this exception.

The amendments cover novations to central counterparties, as well

as to intermediaries such as clearing members, or clients of the

latter that are themselves intermediaries.

For novations that do not meet the criteria for the exception, entities

have to assess the changes to the hedging instrument against the

derecognition criteria for financial instruments and the general

conditions for continuation of hedge accounting.

Transition

The amendments must be applied retrospectively. However, entities

that discontinued hedge accounting in the past, because of a novation

that would be in the scope of the amendments, may not reinstate that

previous hedging relationship. Early application is permitted and must

be disclosed.

Impact

The amendments are, in effect, a relief from the hedge accounting

requirements, and will allow entities to better reflect hedge

relationships in the circumstances in which the novation

exception applies.


IFRS Developments Issue 62: Amendments to IAS 39: Continuing

hedge accounting after novation (June 2013) EYG no. AU1700.


IFRIC 20 Stripping Costs in the Production Phase of a

Surface Mine


Key requirements

IFRIC 20 applies to waste removal (stripping) costs incurred in

surface mining activity, during the production phase of the mine.

If the benefit from the stripping activity will be realised in the

current period, an entity is required to account for the stripping

activity costs as part of the cost of inventory. When the benefit is

the improved access to ore, the entity recognises these costs as a

non-current asset, only if certain criteria are met. This is referred

to as the ‘stripping activity asset’. The stripping activity asset is

accounted for as an addition to, or as an enhancement of, an

existing asset.

If the costs of the stripping activity asset and the inventory

produced are not separately identifiable, the entity allocates the

cost between the two assets using an allocation method based on

a relevant production measure.

After initial recognition, the stripping activity asset is carried at its

cost or revalued amount less depreciation or amortisation and less

impairment losses, in the same way as the existing asset of which it

is a part.

Transition

The interpretation is applied to production stripping costs

incurred on or after the beginning of the earliest period

presented. The interpretation does not require full retrospective

application. Instead it provides a practical expedient for any

stripping costs incurred and capitalised up to the start of the

earliest period presented.


Impact

IFRIC 20 represents a change from the current life of mine

average strip ratio approach used by many mining and metals

entities. Depending on the specific facts and circumstances of an

entity’s mines, these changes may impact both financial position

and profit or loss. In addition, changes may also be required to

processes, procedures and systems of the reporting entity.


IFRS Developments for Mining & Metals: Accounting for waste

removal costs (October 2011) EYG no. AU0979.

IFRIC 21 Levies


Key requirements

IFRIC 21 is applicable to all levies other than outflows that are

within the scope of other standards (e.g., IAS 12 Income Taxes)

and fines or other penalties for breaches of legislation. Levies are

defined in the interpretation as outflows of resources embodying

economic benefits imposed by governments on entities in

accordance with legislation.

The interpretation clarifies that an entity recognises a liability for

a levy when the activity that triggers payment, as identified by

the relevant legislation, occurs. It also clarifies that a levy liability

is accrued progressively only if the activity that triggers payment

occurs over a period of time, in accordance with the relevant

legislation. For a levy that is triggered upon reaching a minimum

threshold, the interpretation clarifies that no liability is

recognised before the specified minimum threshold is reached.

The interpretation does not address the accounting for the debit

side of the transaction that arises from recognising a liability to

pay a levy. Entities look to other standards to decide whether the

recognition of a liability to pay a levy would give rise to an asset

or an expense under the relevant standards.

Transition

The interpretation must be applied retrospectively. Early


Impact

The interpretation is intended to eliminate the current diversity in

practice on the treatment for the obligation to pay levies. The

scope of this interpretation is very broad and captures various

obligations that are imposed by governments in accordance with

legislation and sometimes not always described as ‘levies.’

Therefore, entities need to consider the nature of payments to

governments carefully when determining if the payment is in the

scope of IFRIC 21.


Applying IFRS: Accounting for Levies (June 2014) EYG no. AU2514.

IFRS Developments Issue 59: IASB issues IFRIC Interpretation 21

Levies (May 2013) EYG no. AU1581.


Improvements to International Financial Reporting Standards

Key requirements

The IASB’s annual improvements process deals with non-urgent, but necessary, clarifications and amendments to IFRS.

2009-2011 cycle (issued in May 2012)

In the 2009-2011 annual improvements cycle, the IASB issued six amendments to five standards, summaries of which are

provided below. The amendments are applicable to annual periods beginning on or after 1 January 2013. Earlier application is

permitted and must be disclosed. The amendments must be applied retrospectively, in accordance with the requirements of

IAS 8 for changes in accounting policy.

IFRS 1 First-time Adoption

of International Financial

Reporting Standards

Repeated application of IFRS 1

• The amendment clarifies that an entity that has stopped applying IFRS may choose to either:

(i) Re-apply IFRS 1, even if the entity applied IFRS 1 in a previous reporting period

Or

(ii) Apply IFRS retrospectively in accordance with IAS 8 (i.e., as if it had never stopped applying IFRS)

in order to resume reporting under IFRS.

• Regardless of whether the entity re-applies IFRS 1 or applies IAS 8, it must disclose the reasons why it previously stopped applying IFRS and subsequently resumed reporting in accordance with IFRS.

Borrowing costs

• The amendment clarifies that, upon adoption of IFRS, an entity that capitalised borrowing costs in accordance with its previous GAAP, may carry forward, without adjustment, the amount previously capitalised in its opening statement of financial position at the date of transition.

• Once an entity adopts IFRS, borrowing costs are recognised in accordance with IAS 23 Borrowing Costs, including those incurred on qualifying assets under construction.

IAS 1 Presentation of

Financial Statements

Clarification of the requirements for comparative information

• The amendment clarifies the difference between voluntary additional comparative information and the minimum required comparative information. Generally, the minimum required comparative period is the previous period.

• An entity must include comparative information in the related notes to the financial statements when it voluntarily provides comparative information beyond the minimum required comparative period. The additional comparative period does not need to contain a complete set of financial statements.

• The opening statement of financial position (known as ’the third balance sheet’) must be presented when an entity changes its accounting policies (making retrospective restatements or reclassifications) and those changes have a material effect on the statement of financial position. The opening statement must be at the beginning of the preceding period. For example, the beginning of the preceding period for a 31 December 2014 year-end would be 1 January 2013. However, unlike the voluntary comparative information, the related notes are not required to include comparatives as of the date of the third balance sheet.

IAS 16 Property, Plant and Equipment

Classification of servicing equipment

• The amendment clarifies that major spare parts and servicing equipment that meet the definition of property, plant and equipment are not inventory.


IAS 32 Financial Instruments: Presentation

Tax effects of distributions to holders of equity instruments

• The amendment removes existing income tax requirements from IAS 32 and requires entities to apply the requirements in IAS 12 to any income tax arising from distributions to equity holders.

IAS 34 Interim Financial

Reporting

Interim financial reporting and segment information for total assets and liabilities

• The amendment clarifies the requirements in IAS 34 relating to segment information for total assets and liabilities for each reportable segment to enhance consistency with the requirements in IFRS 8 Operating Segments.

• Total assets and liabilities for a particular reportable segment need to be disclosed only when the amounts are regularly provided to the chief operating decision maker and there has been a material change in the total amount disclosed in the entity’s previous annual financial statements for that reportable segment.

2010-2012 cycle (issued in December 2013)

In the 2010-2012 annual improvements cycle, the IASB issued seven amendments to six standards, summaries of which are provided

below. Other than amendments that only affect the standards’ Basis for Conclusions, the changes are effective from 1 July 2014.

Earlier application is permitted and must be disclosed.

IFRS 2 Share-based Payment Definitions of vesting conditions

• The amendment defines ‘performance condition’ and ‘service condition’ in order to clarify various issues, including the following:

• A performance condition must contain a service condition

• A performance target must be met while the counterparty is rendering service

• A performance target may relate to the operations or activities of an entity, or to those of another entity in the same group

• A performance condition may be a market or non-market condition

• If the counterparty, regardless of the reason, ceases to provide service during the vesting period, the service condition is not satisfied

• The amendment must be applied prospectively.

IFRS 3 Business Combinations Accounting for contingent consideration in a business combination

• The amendment clarifies that all contingent consideration arrangements classified as liabilities or assets arising from a business combination must be subsequently measured at fair value through profit or loss whether or not they fall within the scope of IFRS 9 (or IAS 39, as applicable).


IFRS 8 Operating Segments Aggregation of operating segments

• The amendment clarifies that an entity must disclose the judgements made by management in applying the aggregation criteria in paragraph 12 of IFRS 8, including a brief description of operating segments that have been aggregated and the economic characteristics (e.g., sales and gross margins) used to assess whether the segments are similar.

• The amendment must be applied retrospectively.

Reconciliation of the total of the reportable segments’ assets to the entity’s assets

• The amendment clarifies that the reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker, similar to the required disclosure for segment liabilities.



IFRS 13 Fair Value

Measurement

Short-term receivables and payables

• The amendment clarifies in the Basis for Conclusions that short-term receivables and payables with no stated interest rates can be measured at invoice amounts when the effect of discounting is immaterial.

• The amendment is effective immediately.

IAS 16 Property, Plant and

Equipment and IAS 38

Intangible Assets

Revaluation method – proportionate restatement of accumulated depreciation/amortisation

• The amendment clarifies that the asset may be revalued by reference to observable data on either the gross or the net carrying amount.

• The amendment also clarifies that accumulated depreciation/amortisation is the difference between the gross and carrying amounts of the asset.


IAS 24 Related Party

Disclosures

Key management personnel

• The amendment clarifies that a management entity – an entity that provides key management personnel services – is a related party subject to the related party disclosures. In addition, an entity that uses a management entity is required to disclose the expenses incurred for management services.


2011-2013 cycle (issued in December 2013)

In the 2011-2013 annual improvements cycle, the IASB issued four amendments to four standards, summaries of which are provided below. Other than amendments that only affect the standards’ Basis for Conclusions, the changes are effective 1 July 2014. Earlier application is permitted and must be disclosed.

IFRS 1 First-time Adoption of

International Financial

Reporting Standards

Meaning of ‘effective IFRSs’

• The amendment clarifies in the Basis for Conclusions that an entity may choose to apply either a current standard or a new standard that is not yet mandatory, but permits early application, provided either standard is applied consistently throughout the periods presented in the entity’s first IFRS financial statements.

• The amendment is effective immediately.

IFRS 3 Business Combinations Scope exceptions for joint ventures

• The amendment clarifies that:

• Joint arrangements, not just joint ventures, are outside the scope of IFRS 3

• The scope exception applies only to the accounting in the financial statements of the joint arrangement itself


IFRS 13 Fair Value

Measurement

Scope of paragraph 52 (portfolio exception)

• The amendment clarifies that the portfolio exception in IFRS 13 can be applied not only to financial assets and financial liabilities, but also to other contracts within the scope of IFRS 9 (or IAS 39, as applicable).


IAS 40 Investment Property Interrelationship between IFRS 3 and IAS 40 (ancillary services)

• The description of ancillary services in IAS 40 differentiates between investment property and owner-occupied property (i.e., property, plant and equipment). The amendment clarifies that IFRS 3, not the description of ancillary services in IAS 40, is used to determine if the transaction is the purchase of an asset or a business combination.



IFRS Developments Issue 71: The IASB issues two cycles of annual improvements to IFRS (December 2013) EYG no. AU2068.

IFRS Developments Issue 29: Annual Improvements to IFRS – the 2009 — 2011 cycle (May 2012) EYG no. AU1180.


Certain items deliberated by the Interpretations Committee are published within the “Interpretations Committee agenda decisions”

section of the IASB’s IFRIC Update. Agenda decisions (also referred to as rejection notices) are issues that the Interpretations

Committee decides not to add to its agenda and include the reasons for not doing so. For some of these items, the Interpretations

Committee includes further information about how the standards should be applied. This guidance does not constitute an

interpretation, but rather, provides additional information on the issues raised and the Interpretations Committee’s views on how the

standards and current interpretations are to be applied.

The table below summarises selected topics that the Interpretations Committee decided not to take onto its agenda for the period from

1 September 2013 to 31 August 2014 and contains highlights from the agenda decisions. All items considered by the Interpretations

Committee during its meetings, as well as the full text of its conclusions, can be found in the IFRIC Update on the IASB’s website.5

Final date considered

Issue Summary of reasons given for not adding issue to the Interpretations Committee’s agenda

September 2013 IFRS 10 Consolidated Financial Statements — Effect of protective rights on assessment of control

The Interpretations Committee received a request to clarify whether a previously concluded control assessment should be revisited when facts and circumstances change in such a way that rights, previously determined to be protective, change (e.g., upon the breach of a covenant in a borrowing arrangement that causes the borrower to be in default), or whether, instead, such rights are never included in the reassessment of control upon a change in facts and circumstances.

The Interpretations Committee noted that a previously concluded control assessment would need to be revisited after the change occurred.

November 2013 IFRS 10 Consolidated Financial Statements and IFRS 11 Joint Arrangements — Transition provisions in respect of impairment, foreign exchange and borrowing costs

The Interpretations Committee received a request to clarify whether the transition provisions of IFRS 10 and IFRS 11 apply in respect of the retrospective application of the consequential amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates, IAS 23 or IAS 36.

The Interpretations Committee noted that consequential amendment requirements in other standards, arising when IFRS 10 is applied retrospectively, must be applied retrospectively in accordance with the transition provisions of IFRS 10. However, if retrospective application of the requirements of IFRS 10 is impracticable because it is impracticable to apply retrospectively the consequential amendments of other standards, then IFRS 10 provides exemption from retrospective application.

The Interpretations Committee also observed that, in most cases, the initial application of IFRS 11 should not raise issues in respect of the retrospective application of consequential amendments in other standards.

November 2013 IFRS 10 Consolidated Financial Statements — Classification of puttable instruments that are non-controlling interests

The Interpretations Committee received a request to clarify the classification of puttable instruments that are issued by a subsidiary, but are not held (directly or indirectly) by the parent, in the consolidated financial statements of a group.

The Interpretations Committee noted that puttable instruments are classified as equity in the financial statements of the subsidiary as an exception to the definition of a financial liability provided that all relevant requirements are met. Consequently, these financial instruments are classified as financial liabilities in the parent’s consolidated financial statements.

5 The IFRIC Update is available at http://www.ifrs.org/Updates/IFRIC+Updates/IFRIC+Updates.htm.

Section 2: Items not taken onto the Interpretations

Committee’s agenda

http://www.ifrs.org/Updates/IFRIC%2BUpdates/IFRIC%2BUpdates.htm




November 2013 IAS 19 Employee Benefits — Actuarial assumptions: discount rate

The Interpretations Committee received a request to clarify whether, in the circumstances of the financial crises that led to a significant decrease of the number of corporate bonds rated ‘AAA’ and ‘AA’, corporate bonds with a rating lower than ‘AA’ can be considered to be ‘high quality corporate bonds’ (HQCB) when determining the rate used to discount post-employment benefit obligations.

The Interpretations Committee noted that ‘high quality’ as used in paragraph 83 of IAS 19 reflects an absolute concept of credit quality and not a concept of credit quality that is relative to a given population of corporate bonds. Consequently, the Interpretations Committee observed that the concept of high quality should not change over time. Accordingly, a reduction in the number of HQCB does not alone result in a change to the concept of high quality. The Interpretations Committee does not expect that an entity’s methods and techniques used for determining the discount rate, so as to reflect the yields on HQCB, will change significantly from period to period.

January 2014 IAS 29 Financial Reporting in Hyperinflationary Economies — Applicability of the concept of financial capital maintenance defined in terms of constant purchasing power units

The Interpretations Committee received a request to consider whether an entity is permitted to use the financial capital maintenance concept defined in terms of constant purchasing power units that is described in the Conceptual Framework for Financial Reporting (Conceptual Framework) when the entity’s functional currency is not the currency of a hyperinflationary economy as described in IAS 29.

The Interpretations Committee observed that the guidance in the Conceptual Framework relating to the use of a particular capital maintenance concept cannot be used to override the requirements of any standard, and an entity is not permitted to apply a concept of capital maintenance that conflicts with the existing requirements in a particular standard, when applying that standard.

January 2014 IAS 32 Financial Instruments: Presentation — A financial instrument that is mandatorily convertible into a variable number of shares (subject to a cap and a floor) but gives the issuer the option to settle by delivering the maximum (fixed) number of shares

The Interpretations Committee received a request to clarify how an issuer would assess the substance of a particular early settlement option included in a financial instrument in accordance with IAS 32.

The Interpretations Committee noted that if a contractual term of a financial instrument lacks substance, that contractual term would be excluded from the classification assessment of the instrument.

To determine whether the early settlement option is substantive, the issuer will need to understand whether there are actual economic or other business reasons that the issuer would exercise the option. Factors relevant for consideration would include:

• Whether the instrument would have been priced differently if the issuer’s early settlement option had not been included in the contractual terms

• The term of the instrument

• The width of the range between the cap and the floor

• The issuer’s share price

• The volatility of the share price




March 2014 IFRS 10 Consolidated Financial Statements: Investment Entities Amendments — The definition of investment-related services or activities

The Interpretations Committee received a request to clarify the definition of ‘investment-related services or activities’ relating to subsidiaries that act as intermediate holding companies ('intermediate subsidiaries') established for ‘tax optimisation’ purposes.

The Interpretations Committee noted that, according to paragraph BC272 of IFRS 10, the IASB believes that fair value measurement of all of an investment entity’s subsidiaries would provide the most useful information, except for subsidiaries providing investment-related services or activities. As one of the characteristics of ‘tax optimisation’ subsidiaries described in the submission is “that there is no activity within the subsidiary”, the Interpretations Committee considers that the parent should not consolidate such subsidiaries, because they do not provide investment-related services or activities, and do not meet the requirements to be consolidated in accordance with paragraph 32 of IFRS 10. The parent, therefore, accounts for such an intermediate subsidiary at fair value.

March 2014 IAS 17 Leases — Meaning of ‘incremental costs’

The Interpretations Committee received a request to clarify the meaning of ‘incremental costs’ in IAS 17. Specifically, whether the salary costs of permanent staff involved in negotiating and arranging new leases qualify as ‘incremental costs’ and, therefore, should be included as initial direct costs in the initial measurement of the finance lease receivable.

The Interpretations Committee noted that internal fixed costs do not qualify as ‘incremental costs’. Only those costs that would not have been incurred if the entity had not negotiated and arranged a lease are included in the initial measurement of the finance lease receivable.

March 2014 IFRIC 21 Levies — Identification of a present obligation to pay a levy that is subject to a pro rata activity threshold as well as an annual activity threshold

The Interpretations Committee received a request to clarify how thresholds stated in legislation should be considered when identifying an obligating event for a levy.The Interpretations Committee discussed regimes in which an obligation to pay a levy arises as a result of activity during a period but is not payable until a minimum activity threshold is reached. The threshold is set as an annual threshold, but is reduced, pro-rata to the number of days in the year that the entity started or stopped participating in the relevant activity during the course of the year.

The Interpretations Committee noted that, in the circumstance described, payment of the levy is triggered by reaching the annual threshold as identified by the legislation. The Interpretations Committee also noted that the entity would be subject to a threshold that is lower than the threshold that applies at the end of the annual assessment period if, and only if, the entity stops the relevant activity before the end of the annual assessment period. Accordingly, the Interpretations Committee observed that the obligating event for the levy is reaching the threshold that applies at the end of the annual assessment period.




May 2014 IFRS 11 Joint Arrangements — Classification of joint arrangements

The interpretations Committee received a request to clarify how the assessment of ‘other facts and circumstances’ described in IFRS 11 affects the classification of a joint arrangement as a joint operation or a joint venture.

The Interpretations Committee noted that the classification of a joint arrangement as a joint operation or joint venture depends on the enforceable rights to the assets and obligations for the liabilities of the parties. Furthermore, when ‘other facts and circumstances’ give the parties rights to the assets, and obligations for the liabilities, that would lead to the classification of joint operation for the arrangement. Consequently, the Interpretations Committee noted that the assessment focuses on whether those facts and circumstances create rights to the assets and obligations for the liabilities.

May 2014 IAS 12 Income Taxes — Recognition and measurement of deferred tax assets when an entity is loss-making

The Interpretations Committee received a request to clarify the following: a) Whether IAS 12 requires that a deferred tax asset is recognised for the

carryforward of unused tax losses when there are suitable reversing taxable temporary differences, regardless of an entity’s expectations of future tax losses

b) How the requirements in IAS 12 is applied when tax laws limit the extent to which tax losses brought forward can be recovered against future taxable profits (i.e., limited to a specific percentage of taxable profits in each tax year)

With respect to a), the Interpretations Committee noted that the reversal of suitable taxable temporary differences enables the utilisation of the unused tax losses and justifies the recognition of deferred tax assets. In response to b), the Interpretations Committee noted that when tax laws limit the extent to which unused tax losses can be recovered against future taxable profits in each year, the amount of deferred tax assets recognised from unused tax losses as a result of suitable existing taxable temporary differences is restricted as specified by the tax law.

May 2014 IAS 32 Financial Instruments: Presentation — Accounting for a financial instrument that is mandatorily convertible into a variable number of shares subject to a cap and a floor

The Interpretations Committee received a request to clarify the accounting for a financial instrument that has a fixed maturity and, at maturity, the issuer must deliver a variable number of its own equity instruments. The number of equity instruments is equal to a fixed amount of cash, but subject to a cap and a floor. The cap and floor limit the number of equity instruments to be delivered to a fixed maximum and minimum number of shares, respectively.

The Interpretations Committee noted that the contractual substance of the instrument is a single obligation to deliver a variable number of equity instruments at maturity, with the variation based on the value of those equity instruments.

Furthermore, the Interpretations Committee noted that the cap and the floor are embedded derivative features whose values change in response to the price of the issuer’s equity instrument. Consequently, those options must be separated from the host liability contract and accounted for at fair value through profit or loss in accordance with IAS 39 or IFRS 9, assuming that the issuer has not elected to designate the entire instrument under the fair value option.




July 2014 IFRS 2 Share-based Payment — Price difference between the institutional offer price and the retail offer price for shares in an initial public offering

The Interpretations Committee received a request to clarify how an entity should account for a price difference between the institutional offer price and the retail offer price for shares issued in an initial public offering (IPO).

In the circumstances underlying the submission, the Interpretations Committee observed that the entity issues shares at different prices to two different groups of investors (retail and institutional) and that the difference, if any, between the retail price and the institutional price of the shares appears to relate to the existence of different markets (one that is accessible to retail investors only and another one accessible to institutional investors only) instead of the receipt of additional goods or services. Consequently, the Interpretations Committee observed that the requirements in IFRS 2 are not applicable because there is no share-based payment transaction.

July 2014 IAS 1 Presentation of Financial Statements — Disclosure requirements relating to assessment of going concern

The Interpretations Committee received a request to clarify the disclosures required for material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern. The Interpretations Committee discussed situations in which having considered the feasibility and effectiveness of any planned mitigation, management may conclude that there are no material uncertainties that require disclosure, but reaching that conclusion would involve significant judgement.

The Interpretations Committee observed that in the circumstance discussed, the disclosure requirements of paragraph 122 of IAS 1 would apply to the judgements made in concluding that there remain no material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern.

July 2014 IAS 12 Income Taxes — Recognition of current income tax on uncertain tax position

The Interpretations Committee received a request to clarify the recognition of a tax asset in the situation in which tax laws require an entity to make an immediate payment when a tax examination results in an additional charge, even if the entity intends to appeal against the additional charge. The entity expects, but is not certain, to recover some or all of the amount paid. The Interpretations Committee was asked to clarify whether IAS 12 or IAS 37 is applied to determine whether to recognise an asset for the payment.

The Interpretations Committee understood that the reference to IAS 37 in paragraph 88 of IAS 12 in respect of tax-related contingent liabilities and contingent assets may have been understood by some to mean that IAS 37 applied to the recognition of such items. However, the Interpretations Committee noted that paragraph 88 of IAS 12 provides guidance only on disclosures required for such items, and that IAS 12, not IAS 37, provides the relevant guidance on recognition.




July 2014 IAS 12 Income Taxes — Recognition of deferred tax for a single asset in a corporate wrapper

The Interpretations Committee received a request to clarify the accounting for deferred tax in the consolidated financial statements of the parent, when a subsidiary has only one asset within it (the asset inside) and the parent expects to recover the carrying amount of the asset inside by selling the shares in the subsidiary.

The Interpretations Committee noted that IAS 12 requires the entity to determine temporary differences in the consolidated financial statements by comparing the carrying amounts of assets and liabilities in the consolidated financial statements with the appropriate tax base. In the case of an asset or a liability of a subsidiary that files separate tax returns, this is the amount that will be taxable or deductible on the recovery (settlement) of the asset (liability) in the tax returns of the subsidiary. Furthermore, IAS 12 requires a parent to determine the temporary difference related to the shares held by it in the subsidiary by comparing the parent’s share of the net assets of the subsidiary in the consolidated financial statements, including the carrying amount of goodwill, with the tax base of the shares for purposes of the parent’s tax returns.

The Interpretations Committee also noted that IAS 12 requires a parent to recognise both the deferred tax related to the asset inside and the deferred tax related to the shares, if:

a) Tax law attributes separate tax bases to the asset inside and to the shares

b) In the case of deferred tax assets, the related deductible temporary differences can be utilised as specified in paragraphs 24–31 of IAS 12

c) No specific exceptions in IAS 12 apply

July 2014 IAS 34 Interim Financial Reporting — Condensed statement of cash flows

The Interpretations Committee received a request to clarify the application of the requirements regarding the presentation and content of the condensed statement of cash flows in the interim financial statements according to IAS 34.

The Interpretations Committee noted that a condensed statement of cash flows is one of the primary statements that is included as part of an interim financial report. IAS 34 specifies that each of the condensed statements must include, at a minimum, each of the headings and subtotals that were included in the most recent annual financial statements, and also requires additional line items to be included if their omission would make the interim financial statements misleading.

The Interpretations Committee noted that a condensed statement of cash flows includes all information that is relevant in understanding an entity’s ability to generate cash flows and the entity’s needs to utilise those cash flows. Therefore, it did not expect that a condensed cash flow statement only presenting one line for net cash flows from operating activities, one line for net cash flows from investing activities, and one line for net cash flows from financing activities alone would meet the requirements in IAS 34.


The IASB is working on a number of projects and interpretations, some of which are expected to be issued by the end of 2014.

All standards or interpretations that are issued, but not yet effective, need to be considered in the disclosure requirements, as set

out in IAS 8. This includes disclosure of the known or reasonably estimable impact that initial application of the pronouncement is

expected to have on the entity’s financial statements. If the impact is not known or reasonably estimable, disclosure of this fact must also

be made. Therefore, users of this publication should be alert for any changes in IFRS requirements between 31 August 2014 and the date

on which their financial statements are authorised for issue.

The table below sets out an estimated timeline for the projects on the IASB’s active agenda (excluding research projects) as at 30 July

2014.

IASB projects6 Q3-4 2014 Q1 2015 Q2 2015

Insurance Contracts Redeliberations

Leases7 Redeliberations

Financial Instruments - Accounting for Dynamic Risk Management: A Portfolio Revaluation Approach to Macro Hedging

Public consultation

Rate-regulated Activities (comprehensive project) Discussion paper

Disclosure Initiative

Principles of Disclosure Deliberations

Amendments to IAS 1 Redeliberations

Reconciliation of Liabilities from Financing Activities Exposure draft

Annual Improvements 2012 — 2014 IFRS

Annual Improvements 2014 — 2016 Exposure

draft

Clarifications of Classification and Measurement of Share-based Payment Transactions (proposed amendments to IFRS 2)

Exposure draft

Classification of Liabilities (proposed amendments to IAS 1) Exposure draft

Elimination of Gains or Losses Arising from Transactions between an Entity and its Associate or Joint Venture (proposed amendments to IAS 28)

Exposure draft

Fair Value Measurement: Unit of Account Exposure draft

Investment Entities: Applying the Consolidation Exception (proposed amendments to IFRS 10 and IAS 28)

Redeliberations

Recognition of Deferred Tax Assets for Unrealised Losses (proposed amendments to IAS 12)

Exposure draft

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (proposed amendments to IFRS 10 and IAS 28)

IFRS

Post-implementation Review - IFRS 3 Business Combinations Deliberations

Conceptual Framework (chapters addressing elements of financial statements, measurement, reporting entity, and presentation and disclosure)

Exposure draft

Comprehensive review of the IFRS for SMEs Redeliberations

EY publications

Further information about these proposed pronouncements can be found at www.ey.com/ifrs.

6 The timeline and most up-to-date information for these projects can be found on the IASB’s website http://www.ifrs.org/Current+Projects/IASB+Projects/IASB+Work+Plan.htm. This is updated on a regular basis by the IASB.

7 Project developed jointly with the US Financial Accounting Standards Board.

Section 3: Expected pronouncements from the IASB

http://www.ey.com/ifrs

http://www.ifrs.org/Current%2BProjects/IASB%2BProjects/IASB%2BWork%2BPlan.htm

http://www.ifrs.org/Current%2BProjects/IASB%2BProjects/IASB%2BWork%2BPlan.htm

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This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.

About EY’s International Financial Reporting Standards GroupA global set of accounting standards provides the global economy with one measure to assess and compare the performance of companies. For companies applying or transitioning to International Financial Reporting Standards (IFRS), authoritative and timely guidance is essential as the standards continue to change. The impact stretches beyond accounting and reporting, to key business decisions you make. We have developed extensive global resources — people and knowledge — to support our clients applying IFRS and to help our client teams. Because we understand that you need a tailored service as much as consistent methodologies, we work to give you the benefit of our deep subject matter knowledge, our broad sector experience and the latest insights from our work worldwide.

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This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.

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